First, making sure I've got this right: if I donate shares of a stock, ETF, or mutual fund with appreciated gains, I can deduct the market value of the shares at the time they were gifted, subject to a 30% AGI limit, correct?

If that's right, is there any reason not to do this provided I plan to donate anyway? I have some shares in taxable that I could use for this purpose. The way I'm looking at it is...

Method 1: Cash

Donate $1000 cash

Deduct $1000 on 2018 taxes

Method 2: Shares

Donate $1000 worth of shares

Deduct $1000 on 2018 taxes

Purchase back $1000 worth of shares with the cash I was planning to donate anyway

I think it works. The other thing to consider is the current value of shares, relative to cost basis. I have sometimes transfered shares in kind of highly appreciated stock from after tax brokerage to my charitable trust account-- rather than sell some of the shares to take profit. In this way, I'm "taking profit", reducing the appreciated shares back to the level I want-- and not being taxed on the gain but instead deducting the entire thing.

In my case, that allows me to convert an equivalent amount of before tax IRA money to my ROTH without actually incurring more tax.

I'll definitely be itemizing, but good call out, especially with the standard deduction increasing quite a bit in 2018.

I didn't know a donor advised fund was a thing. That's pretty interesting. I'll look into it - essentially, sounds like I transfer whatever assets I want into it, take the tax break, then "recommend" distributions in cash to various charities whenever I want? That could work nicely.

If I put, say, stock shares in a DAF, can they be converted to something else? I'm thinking that if I donated equities I would worry a bit about the stability, I'd rather the DAF hold something like bonds.

If I put, say, stock shares in a DAF, can they be converted to something else? I'm thinking that if I donated equities I would worry a bit about the stability, I'd rather the DAF hold something like bonds.

Yes, once you put the money in the DAF, you still decide the allocation. They have different indexes to choose from...Total US, Total ex-US, bond funds of varying duration, money market funds, etc. Just remember the deduction amount is the amount you originally “donate” to the DAF regardless of whether it goes up or down.

Some of us used DAFs to bunch several years' worth of contributions at the end of last year after the new tax laws were set. That way we still got the deduction before the expanded standard deduction. I used a block of small-value bought in 2009, so well-appreciated in price.

It's much easier to donate to a DAF from within the same brokerage as the post-tax account, especially if you want donate shares from specific lots. For example, if your post-tax account is with Schwab, use Schwab's DAF ("Schwab Charitable"). Similarly for Fidelity and Vanguard. (If I recall correctly, VG's DAF has a much higher minimum than Schwab's or Fidelity's).

"Happiness Is Not My Companion" - Gen. Gouverneur K. Warren. (Avatar is the statue of Gen. Warren at Little Round Top @ Gettysburg National Military Park.)

It's much easier to donate to a DAF from within the same brokerage as the post-tax account, especially if you want donate shares from specific lots. For example, if your post-tax account is with Schwab, use Schwab's DAF ("Schwab Charitable"). Similarly for Fidelity and Vanguard. (If I recall correctly, VG's DAF has a much higher minimum than Schwab's or Fidelity's).

I'm not sure why you say it is much easier to stay within a brokerage family. I have donated shares (specific lots) from my Vanguard brokerage account to my Fidelity Charitable account by filling out a form and dropping the signed form in the mailbox. Two days later, Fidelity Charitable had received and sold the shares and credited the proceeds to my DAF. Note that the charitable organizations are separate entities from the brokerage houses, so while they share a name, they are independently managed.

It's much easier to donate to a DAF from within the same brokerage as the post-tax account, especially if you want donate shares from specific lots. For example, if your post-tax account is with Schwab, use Schwab's DAF ("Schwab Charitable"). Similarly for Fidelity and Vanguard. (If I recall correctly, VG's DAF has a much higher minimum than Schwab's or Fidelity's).

I'm not sure why you say it is much easier to stay within a brokerage family. I have donated shares (specific lots) from my Vanguard brokerage account to my Fidelity Charitable account by filling out a form and dropping the signed form in the mailbox. Two days later, Fidelity Charitable had received and sold the shares and credited the proceeds to my DAF. Note that the charitable organizations are separate entities from the brokerage houses, so while they share a name, they are independently managed.

I've donated mutual fund shares from Vanguard to Fidelity Charitable. I faxed the form to Fidelity instead of mailing it. Very easy process.

It's much easier to donate to a DAF from within the same brokerage as the post-tax account, especially if you want donate shares from specific lots. For example, if your post-tax account is with Schwab, use Schwab's DAF ("Schwab Charitable"). Similarly for Fidelity and Vanguard. (If I recall correctly, VG's DAF has a much higher minimum than Schwab's or Fidelity's).

I'm not sure why you say it is much easier to stay within a brokerage family. I have donated shares (specific lots) from my Vanguard brokerage account to my Fidelity Charitable account by filling out a form and dropping the signed form in the mailbox. Two days later, Fidelity Charitable had received and sold the shares and credited the proceeds to my DAF. Note that the charitable organizations are separate entities from the brokerage houses, so while they share a name, they are independently managed.

Easier is relative. At least Fidelity to Fidelity Charitable can all be done on-line and the assets being sold (Fidelity Charitable does not keep the shares you donate - rather they are immediately sold and used to purchase shares of their internal funds) will sell the same day provided the donation is done at least 15 minutes before market close. But they're all in the business of making it easy.

It is true that "easier is relative." We saw here at bogleheads.org at the end of 2017 all the folks trying to donate shares to their DAF on 12/31/2017 or at least in those last few days. It was a mad scramble to get the donation into tax year 2017. Some folks apparently didn't make it.

A click-click with DAF and brokerage at Fidelity would have helped those folks. I would not be surprised if Vanguard BS and Vanguard Charitable still required one to mail in forms.

Easier is relative. At least Fidelity to Fidelity Charitable can all be done on-line and the assets being sold (Fidelity Charitable does not keep the shares you donate - rather they are immediately sold and used to purchase shares of their internal funds) will sell the same day provided the donation is done at least 15 minutes before market close. But they're all in the business of making it easy.

Schwab brokerage to Schwab charitable is also super-easy. A few mouse clicks, no paper, no signatures, no delay. I log into Schwab Charitable and it already knows what shares I have in my Schwab taxable brokerage account, it gives me a drop-down menu, I just enter the number of shares of each mutual fund or ETF that I want to donate (all of which are Vanguard products, by the way!), then click a few mouse clicks to confirm my choices, and it is done.

Note that the charitable organizations are separate entities from the brokerage houses, so while they share a name, they are independently managed.

They are indeed independently managed entities, but at least at Schwab, there is a common log-in platform. When I log into my Schwab DAF account, I am automatically also logged into my Schwab taxable brokerage account.

Note that the charitable organizations are separate entities from the brokerage houses, so while they share a name, they are independently managed.

They are indeed independently managed entities, but at least at Schwab, there is a common log-in platform. When I log into my Schwab DAF account, I am automatically also logged into my Schwab taxable brokerage account.

Same at Fidelity. And you can tell it how much you want to contribute and it will pre-populate a form with the highest gain securities in your taxable accounts (which you can then change if desired).

Thanks for all the answers. Didn't realize there was a mad rush at the end of last year, but that makes sense. I don't think it would have made much difference in my situation.

I'm not 70.5+, I still have a ways to go there...

Does anyone have experience with a Vanguard brokerage account and Vanguard DAF? I would love to not have to mail things around. I think I'll give them a call this morning and ask them how it works. The tools at Fidelity a couple people have described sound like exactly what I want.

Online is certainly easier for me. I don't have a working printer (or at least not one with working ink cartridges) and I don't have fax capability. There are third-party fax services, but I'd be a little leery on those.

I did two stages, one a regular ACATS transfer of ETF shares from Edge to Fidelity, then once that was done fund the DAF from the Fidelity brokerage account. Pretty fast and easy. I used to be able to fax and print from work, but that's not an option now.

This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

I can send faxes and print, but I don't really want to. And the lag between the decision and the change actually happening might be annoying.

I spent some time on the phone with Vanguard this morning. Sounds... mixed. As long as I have an online non-managed brokerage account, the amounts are under $2 million, and the owners of both the brokerage account and the DAF have online accounts at Vanguard, I can use online tools to make the transfers.

But there's some confusion about identifying particular funds to be transferred. I think they'll use the default cost basis for online transfers, which is average cost, and that would be far from ideal for tax purposes. FIFO would work well for the shares I have now, and I could change the basis to that. But if I want to donate specific shares or specific lots, I think I'd have to do that over the phone, or possibly by mail or emailed document scan.

The Fidelity tools sound perfect, but I have two Roth IRAs, two tIRAs, and my Brokerage account all at Vanguard. It would also be a real pain to transfer all of that over to Fidelity.

The Fidelity tools sound perfect, but I have two Roth IRAs, two tIRAs, and my Brokerage account all at Vanguard. It would also be a real pain to transfer all of that over to Fidelity.

Well, you wouldn't transfer all that to Fidelity.

We have a Fidelity DAF and a Fidelity joint brokerage account. The Fido joint brokerage account has a single investment in it: VBR shares bought back in April 2009. The shares were transferred over many years ago in order to collect a nice bonus. Since then, the dividends have been automatically deposited in our WellsFargo checking account. Occasionally, some shares are donated to the DAF. Otherwise, no transactions, no commissions, no fees, no nothing, no complications. Set-and-forget.

I doubt we will ever ever sell those shares, but we get a different perspective on financial firms and a backup place to do business if we ever want to dump Vanguard completely. And the 2% cashback credit card is my workhorse credit card nowadays.

We have a Fidelity DAF and a Fidelity joint brokerage account. The Fido joint brokerage account has a single investment in it: VBR shares bought back in April 2009. The shares were transferred over many years ago in order to collect a nice bonus. Since then, the dividends have been automatically deposited in our WellsFargo checking account. Occasionally, some shares are donated to the DAF. Otherwise, no transactions, no commissions, no fees, no nothing, no complications. Set-and-forget.

I doubt we will ever ever sell those shares, but we get a different perspective on financial firms and a backup place to do business if we ever want to dump Vanguard completely.

Do you think the ease of the Fidelity DAF tools are worth the hassle of transferring the brokerage account over, and the mild overhead of paperwork from two separate institutions?

I haven't done an ACATS transfer before, is that much work? I'd also have to transfer my funds to ETFs at Vanguard and then move those over to Fidelity. Would all the cost basis info be preserved?

The transfer over is probably about the same amount of work as setting up a Vanguard DAF at Vanguard and donating to the Vanguard DAF.

I guess it hasn't been said in this thread yet but the Vanguard DAF has a higher initial minimum balance than the Fidelity DAF and also the individual donations from the Vanguard DAF have higher minimums. For these 2 reasons, many people on this forum choose Fidelity DAF over Vanguard DAF.

Bottom line: There is no actual hassle transferring over at least ETF shares. It's all in your mind.

It's much easier to donate to a DAF from within the same brokerage as the post-tax account, especially if you want donate shares from specific lots. For example, if your post-tax account is with Schwab, use Schwab's DAF ("Schwab Charitable"). Similarly for Fidelity and Vanguard. (If I recall correctly, VG's DAF has a much higher minimum than Schwab's or Fidelity's).

I'm not sure why you say it is much easier to stay within a brokerage family.

'Cuz it is. This isn't only my experience, but many others' on this forum as well. There was a flurry of DAF threads late last year and early this year testifying as such.

I'm glad your transaction between VG and Fidelity's DAF was consummated expeditiously and without incident. Two days from mailing a form (US Mail) to shares transferred seems incredibly fast.

"Happiness Is Not My Companion" - Gen. Gouverneur K. Warren. (Avatar is the statue of Gen. Warren at Little Round Top @ Gettysburg National Military Park.)

It's much easier to donate to a DAF from within the same brokerage as the post-tax account, especially if you want donate shares from specific lots. For example, if your post-tax account is with Schwab, use Schwab's DAF ("Schwab Charitable"). Similarly for Fidelity and Vanguard. (If I recall correctly, VG's DAF has a much higher minimum than Schwab's or Fidelity's).

I'm not sure why you say it is much easier to stay within a brokerage family.

'Cuz it is. This isn't only my experience, but many others' on this forum as well. There was a flurry of DAF threads late last year and early this year testifying as such.

I'm glad your transaction between VG and Fidelity's DAF was consummated expeditiously and without incident. Two days from mailing a form (US Mail) to shares transferred seems incredibly fast.

A big reason for the flurry was because of the tight time window between the final passage of the tax bill and year-end. That isn't the case now.

The times I've transferred from Vanguard mutual fund account to Fidelity DAF, it was easy. At least in terms of how I define it and also in terms of what I was expecting before the first one. Also much easier than the direct share transfers to charities I had been doing. I filled out the Fidelity DAF form, printed it, signed it, and then faxed it to Fidelity. The full round trip transfers have been completed in 2-3 days.

Maybe not as quick and easy as a few clicks, but I'm very pleased with Vanguard for my investments and very pleased with how the Fidelity DAF works. The Fidelity minimums are much lower than Vanguard Charitable.

It's much easier to donate to a DAF from within the same brokerage as the post-tax account, especially if you want donate shares from specific lots. For example, if your post-tax account is with Schwab, use Schwab's DAF ("Schwab Charitable"). Similarly for Fidelity and Vanguard. (If I recall correctly, VG's DAF has a much higher minimum than Schwab's or Fidelity's).

I'm not sure why you say it is much easier to stay within a brokerage family. I have donated shares (specific lots) from my Vanguard brokerage account to my Fidelity Charitable account by filling out a form and dropping the signed form in the mailbox. Two days later, Fidelity Charitable had received and sold the shares and credited the proceeds to my DAF. Note that the charitable organizations are separate entities from the brokerage houses, so while they share a name, they are independently managed.

Easier is relative. At least Fidelity to Fidelity Charitable can all be done on-line and the assets being sold (Fidelity Charitable does not keep the shares you donate - rather they are immediately sold and used to purchase shares of their internal funds) will sell the same day provided the donation is done at least 15 minutes before market close. But they're all in the business of making it easy.

Okay, you’re right. That is easier. I was unaware of that. Now I’m thinking I might transfer some highly appreciated shares to Fidelity to have on-hand for future charitable contributions.

As others have said, be sure you are itemizing. I haven't seen you address that question, and that is what will determine your deduction. The tax plan increased the standard deduction to $24,000 per couple. Any deductions up to that amount will not affect your taxes since you would claim the standard deduction.

That said, even if the shares turn out not to increase your deduction, you can still donate them and avoid capital gains tax.

As others have said, be sure you are itemizing. I haven't seen you address that question, and that is what will determine your deduction. The tax plan increased the standard deduction to $24,000 per couple. Any deductions up to that amount will not affect your taxes since you would claim the standard deduction.

That said, even if the shares turn out not to increase your deduction, you can still donate them and avoid capital gains tax.

Yes, will definitely be itemizing. Though I guess the original question stands either way - if I'm going to be donating anyway, it seems like a no-brainer to do it via appreciated shares instead of cash to avoid capital gains tax.

A big reason for the flurry was because of the tight time window between the final passage of the tax bill and year-end. That isn't the case now.

The times I've transferred from Vanguard mutual fund account to Fidelity DAF, it was easy. At least in terms of how I define it and also in terms of what I was expecting before the first one. Also much easier than the direct share transfers to charities I had been doing. I filled out the Fidelity DAF form, printed it, signed it, and then faxed it to Fidelity. The full round trip transfers have been completed in 2-3 days.

Maybe not as quick and easy as a few clicks, but I'm very pleased with Vanguard for my investments and very pleased with how the Fidelity DAF works. The Fidelity minimums are much lower than Vanguard Charitable.

That's pretty much me as well. I was one of those last-minuters last year and they managed to process the transfer in a pleasingly short amount of time; it just took awhile for the paperwork to settle. The lower minimums for donation as well as fund level made Fidelity much more attractive to me and they were definitely worth the little extra trouble; the little extra just seemed magnified because I'd left stuff to the last minute.

A big reason for the flurry was because of the tight time window between the final passage of the tax bill and year-end. That isn't the case now.

The times I've transferred from Vanguard mutual fund account to Fidelity DAF, it was easy. At least in terms of how I define it and also in terms of what I was expecting before the first one. Also much easier than the direct share transfers to charities I had been doing. I filled out the Fidelity DAF form, printed it, signed it, and then faxed it to Fidelity. The full round trip transfers have been completed in 2-3 days.

Maybe not as quick and easy as a few clicks, but I'm very pleased with Vanguard for my investments and very pleased with how the Fidelity DAF works. The Fidelity minimums are much lower than Vanguard Charitable.

Certainly sounds like the Fidelity DAF is the way to go. It actually sounds from my phone call this morning that Vanguard brokerage account + Fidelity DAF would be about as easy as Vanguard brokerage + Vanguard DAF.

That means the question is really whether I should transfer my brokerage account over to Fidelity. Downsides are paying for ETF trades in Vanguard ETFs that would be free at Vanguard, and having another account somewhere to manage. Upsides are much better tools for contributing to the DAF, which I'll probably do a few times per year.

Fidelity has some commission-free ETF options I could use instead of Vanguard funds down the road. I know we talk almost exclusively about Vanguard options around here, but it seems like the iShares or Fidelity options are very similar, or may even have lower expense ratios. I hold FTSE ex-US and Total Stock in taxable - ITOT seems nearly identical to Total Stock, I'm guessing there's a good substitute for FTSE ex-US / Total International as well?

Yes, will definitely be itemizing. Though I guess the original question stands either way - if I'm going to be donating anyway, it seems like a no-brainer to do it via appreciated shares instead of cash to avoid capital gains tax.

Correct, but the original question was whether you would get to deduct the full market value. Just wanted to be sure you understood that you need to itemize to get that deduction, and itemizing is harder now.

Yes, will definitely be itemizing. Though I guess the original question stands either way - if I'm going to be donating anyway, it seems like a no-brainer to do it via appreciated shares instead of cash to avoid capital gains tax.

Correct, but the original question was whether you would get to deduct the full market value. Just wanted to be sure you understood that you need to itemize to get that deduction, and itemizing is harder now.

Right - thanks for the clarification. So it's a no brainer, provided that...
- I'm donating either way
- I'm itemizing deductions
- Gains in shares are long term (greater than one year)
- I'm under the 30% AGI limit

Last edited by johan851 on Tue Mar 13, 2018 3:18 pm, edited 1 time in total.

I don't think anyone has commented on this. Buying back the donated shares and resetting your cost basis at a possibly much higher amount is a big benefit of this method.

Exactly - such a big benefit that it felt like I must be missing something. Sets you up nicely to harvest a future loss, too. You kind of win either way.

You're simply looking at the other side of the coin. Most folks focus on avoiding having to pay the capital gains tax on the stock sale. Goes without saying, you should sell the lowest cost basis (i.e. highest tax liability) shares for maximum benefit. Also, they need to be long term gains, not short term.

A big reason for the flurry was because of the tight time window between the final passage of the tax bill and year-end. That isn't the case now.

The times I've transferred from Vanguard mutual fund account to Fidelity DAF, it was easy. At least in terms of how I define it and also in terms of what I was expecting before the first one. Also much easier than the direct share transfers to charities I had been doing. I filled out the Fidelity DAF form, printed it, signed it, and then faxed it to Fidelity. The full round trip transfers have been completed in 2-3 days.

Maybe not as quick and easy as a few clicks, but I'm very pleased with Vanguard for my investments and very pleased with how the Fidelity DAF works. The Fidelity minimums are much lower than Vanguard Charitable.

Certainly sounds like the Fidelity DAF is the way to go. It actually sounds from my phone call this morning that Vanguard brokerage account + Fidelity DAF would be about as easy as Vanguard brokerage + Vanguard DAF.

That means the question is really whether I should transfer my brokerage account over to Fidelity. Downsides are paying for ETF trades in Vanguard ETFs that would be free at Vanguard, and having another account somewhere to manage. Upsides are much better tools for contributing to the DAF, which I'll probably do a few times per year.

Fidelity has some commission-free ETF options I could use instead of Vanguard funds down the road. I know we talk almost exclusively about Vanguard options around here, but it seems like the iShares or Fidelity options are very similar, or may even have lower expense ratios. I hold FTSE ex-US and Total Stock in taxable - ITOT seems nearly identical to Total Stock, I'm guessing there's a good substitute for FTSE ex-US / Total International as well?

I'd suggest you try transferring from Vanguard to Fidelity DAF first and see how it goes. You can always do the Vanguard brokerage to Fidelity brokerage at a later date.

You mentioned doing DAF transfers a few times per year. Unless there's a compelling reason to do otherwise, one of the nice things about the DAF is that you can transfer a full year's worth of donations to the DAF at once, or even several years worth like many of us did in 2017, and spread out the advised distributions to the charities over time. The DAF balance stays invested the entire time. And if you do go with Fidelity DAF, be sure to look for their institutional share class index fund options. Most of the options are higher cost managed funds.

I'd suggest you try transferring from Vanguard to Fidelity DAF first and see how it goes. You can always do the Vanguard brokerage to Fidelity brokerage at a later date.

You mentioned doing DAF transfers a few times per year. Unless there's a compelling reason to do otherwise, one of the nice things about the DAF is that you can transfer a full year's worth of donations to the DAF at once, or even several years worth like many of us did in 2017, and spread out the advised distributions to the charities over time. The DAF balance stays invested the entire time. And if you do go with Fidelity DAF, be sure to look for their institutional share class index fund options. Most of the options are higher cost managed funds.

Starting with the Fidelity DAF seems like it wouldn't achieve what I want - I'd like to be able to easily pick the set of shares with the lowest cost basis to donate. Is that tool in the Fidelity DAF or in the Fidelity brokerage account? I'm assuming it's the latter.

I'd suggest you try transferring from Vanguard to Fidelity DAF first and see how it goes. You can always do the Vanguard brokerage to Fidelity brokerage at a later date.

You mentioned doing DAF transfers a few times per year. Unless there's a compelling reason to do otherwise, one of the nice things about the DAF is that you can transfer a full year's worth of donations to the DAF at once, or even several years worth like many of us did in 2017, and spread out the advised distributions to the charities over time. The DAF balance stays invested the entire time. And if you do go with Fidelity DAF, be sure to look for their institutional share class index fund options. Most of the options are higher cost managed funds.

Starting with the Fidelity DAF seems like it wouldn't achieve what I want - I'd like to be able to easily pick the set of shares with the lowest cost basis to donate. Is that tool in the Fidelity DAF or in the Fidelity brokerage account? I'm assuming it's the latter.

The Fidelity DAF Letter of Instruction that is sent to Vanguard allows you to pick specific lots. I picked my lowest cost basis shares at Vanguard.

Assuming you’re asking about the tool to select specific shares, it’s part of the DAF interface but as far as I know, it only works with Fidelity accounts under the same login (in other words, the DAF pulls the shares from the taxable account as opposed to pushing them from the brokerage account). A DAF account can be joint but when logged in with my ID, I see our joint brokerage account and my revocable trust as available for donations; when my wife logs in, she sees the joint account and her trust.